Sunday, September 8, 2013

Need to Scale? Subroto Bagchi's "The Elephant Catchers" will almost get you there

I have always been amazed by Subroto Bagchi's ability to
combine writing and active public engagements with a successful corporate
career. More importantly, he is a good writer, and his books (The High
Performance Entrepreneur; Go Kiss the World) have inspired thousands of young
Indians to take wings and pursue their dreams.

But, from my perspective , his most important book is The
Professional. The rapid growth of the Indian economy has meant that lakhs of
young Indians have entered the workforce in the last two decades. But neither
the Indian education system nor the Indian social system prepares our young
people for organizational life. Subroto's book fills this gap with the most practical
set of inputs that I have seen. Institutions of higher learning in India
couldn’t do better than conduct workshops around the core principles that
Subroto proposes in his book.

Now, The Elephant Catchers

Subroto's latest book returns to his earlier theme of
entrepreneurship but with a twist - this time his focus is on scaling-up and growth.
What does it take to make a company scalable? How do your people requirements
change? What about organizational values? And external branding?

There are aspects of the book that I really liked. I
found Subroto’s candor about the Kyocera fiasco which led to a huge write-off
and, ultimately, the departure of Mindtree founder and Chairman Ashok Soota
refreshing in an era where the truth is often obscured by corporate spin.
Mindtree acquired the whole team developing a new mobile handset from Kyocera
on the premise that the new handset was going to be path-breaking and this
would give Mindtree a leg up in the R&D and product engineering space (one
of the areas where Mindtree has tried to differentiate itself as a company).
However, Subroto describes how they made a major error of judgement, perhaps
carried away by the exciting prospects of a step jump in that business. Readers
who are familiar with our 8 Steps framework would readily see Mindtree’s
failure to do any low cost experiments to test the key hypotheses or
assumptions related to this new product, as well as the absence of a robust
de-risking process as significant gaps in Mindtree’s process.

Another section that I found very useful is on building a
sales engine. The best salesmen rarely make the best heads of sales, the skill
sets and personalities required for the jobs are very different. When you hire
an experienced sales head from another company, s/he will not be used to
working alone and will require other people, data and support to be successful,
so the total cost to the company is much higher than the compensation paid to
the head of sales. And, most importantly, the individual who has been a sales
head in another company may not be the best person to create and build a new
sales organization. While the challenges in building a sales organization are
well known, Subroto does an excellent job of illustrating these challenges
based on Mindtree’s experience. This would be invaluable to any small company
that aspires to grow beyond the efforts of the founders to build a sustainable
sales pipeline.

Strategy, JVs, M&As, and other insights

Subroto makes several other important points in this
book. The first is about “strategy.” In Subroto’s view, you don’t need a
strategy unless you are seeking a significantly higher growth rate than the
industry. While I agree with him that strategy is all about performing much
better than the average performer, I would hesitate to connect strategy to growth
alone. In my classes, I emphasize that the objective of strategy is achieving
sustained, above average returns that exceed the cost of capital. While growth
is one part of this, you need a strategy even if you want to achieve
distinctive performance on other dimensions such as margins or return on
investment.

Subroto emphasizes the important of the emotional connect
of strategy. I couldn’t agree with him more - if you want people to get excited
about the strategy they need to relate to it emotionally. That’s why a catchy story
that communicates the strategy well is much more useful than aggressive
numerical targets.

Subroto has interesting views on joint ventures. He is generally
not in favour of them. I find it interesting that few Indian business leaders
are very gung-ho about alliances. Does this come from a strong need for
control? Or, an inherent distrust of others? Or, because Indian companies often lack a
distinctive advantage that they can bring to the table? I haven’ seen any good
research on this….

Subroto is skeptical about M&A’s as well. Of course,
we know the global stats on the success of M&A’s are not good, and Mindtree’s
experience seems to have been consistent with these! But, I wish he had also
referred to research shows that the ability to do acquisitions successfully is
a capability that has to be learnt, and that there are companies like GE and
Cisco globally, and our own Bharat Forge and the Tata group that have over time
developed the capability to do acquisitions successfully.

The chapters on how to deal with the media, use
consultants and make corporate social responsibility (CSR) a core part of the
company’s strategy don’t cover much new ground but are eminently practical and
would be useful to the entrepreneur trying to scale up his enterprise.

Two Weaknesses

While the book is eminently readable and has a tone that
is Subroto's very own, I found his coverage of two issues unconvincing, or at
least lacking in details. In a way the two are related. If you read Subroto's
earlier book, The High Performance Entrepreneur, you would recall how Mindtree
decided on its core values through a consultative process with its
stakeholders. Mindtree was conceived as a warm and caring company; its logo was
designed by youngsters from the spastic school.

In The Elephant Catchers, Subroto describes how
expertise, being businesslike and adding value became critical attributes as
Mindtree tried to scale. This led to a re-definition of Mindtree’s core values
as well as a change in the external branding and positioning. But the book
doesn't tell you how these changes were effected in the heart and soul of the
company. If merely re-stating values changed organizations, change would be child's
play. Similarly, for a brand to be successful, it has to be much more than
external communication – customers have to experience the brand for themselves
in every interaction with the company. But the book doesn’t complete the
picture on these points.

From discussions with him, I know that Subroto has very
sophisticated ideas on organizational change. He even played the curiously
named role of “Gardener” for a few years in which his focus was on building the
next generation of leadership at Mindtree. In The Elephant Catchers, he
describes how individuals need to scale along with the company, and if they
fail to do so they may not be a part of the longterm plans of the company. But,
somehow, he hasn’t tied these different threads together, and hence the reader
doesn’t get a holistic picture of the change process.

But, I would still recommend this book for its useful
insights and triggers for fresh thinking, and above all for an opportunity to
hear first-hand from one of the best business storytellers of our time.